23 
6 



ADDRESS 



BBPORE THE 



Washington County Agricultural 

Society, 



1896. 



ADDRESS 

DELIVERED AT THE 

TWENTY-SECOND ANNUAL FAIR 

OF THE 

Washington County Agricultural 
Society, 

September i6th, 1896, 



ROWLAND HAZARD, 

Presidetit of the Society . 



WAKEFIEIvD, R. I.: 
D. GILLIES' SONS, TIMES PRINT, 

lSq6. 






BY rR«NsrFf? 

JUN 3 '910 



y 


i 

^ ADDRESS. 

P^ 

Members of the Washington County Agricultural Society, 
Ladies and Gentlemen : — 

The ordinary phrase with which a speaker "invites" the attention 
of his audience to his subject, has no place here to-day. There is 
one subject which forces itself upon our attention; it occupies our 
thoughts ; it fills our minds ; it is vital to our welfare, shall we have 
free coinage of silver at the ratio of i6 to i ? 

In former years I have discussed before you the essential points 
of this question. As long ago as 1877 I touched upon it. The 
addresses of 1892 and 1893 were largely devoted to it. I am glad 
to be able to say that I believe the principles I laid down were 
sound, and in the light of further investigation and greater expe- 
rience they will stand as correct. But when in 1877 I warned you 
against the danger of destroying the gold standard and attempting 
to make silver a standard with gold, I was discussing the matter 
from a scientific standpoint. The advocates of silver were an insig- 
nificant number ; those who believed in paper money were more 
numerous, and even they, the so-called "greenbackers," were quickly 
voted down. The danger was afar off; it was difficult to make 
people believe there was any danger. Now the case is different. 
The storm is upon us. We must examine this question with all the 
intelligence we possess, and we must decide wisely if we would save 
ourselves from disaster. 

What is free coinage at the ratio of 16 to i ? It is the attempt 
to say that as a measure of value 16 ounces of silver shall be the 
equal of i ounce of gold. Sixty years ago this was very near the 



true ratio. At that time the weight of a gold dollar was fixed at 
25.8 grains of standard gold. The silver dollar was made 16 times 
as heavy, and contained 412.5 grains of standard silver. In the 
markets of the world the metals exchanged for each other in this 
proportion. There were, of course, fluctuations, and in general an 
ounce of gold was exchanged for rather less than 16 ounces of silver. 
The actual proportion was nearer 15J ounces of silver for one of 
gold. But the ratio of 16 to I was a near approximation at that 
time, and continued to be so down to about the year 1874. 

But since 1874 a great change has taken place. There is a great 
dispute as to the causes of this change ; there is no dispute what- 
ever as to the fact, and it is certain that with i ounce of gold you 
can now buy in the markets of the world over 32 ounces of silver, 
instead of 16. 

The proposition, therefore, of the free coinage of silver at the 
ratio of 16 to i, is a proposal to change this market rate for silver 
which is now firmly established throughout the civihzed world. It 
is proposed that the United States alone shall say to all holders of 
silver, "Bring your silver to the mint, and we will double its value. 
We will coin it into dollars which shall be equal to gold dollars, and 
will put into those dollars one-half as much silver as a gold dollar 
will buy." It seems as if the simple statement of this proposal 
would show its preposterous character. Consider for a moment its 
effect. There are to-day in the vaults of a single Safe Deposit 
company in New York 1,700,000 ounces of silver belonging to pri- 
vate persons. It is worth to-day 68 cents an ounce. If this law is 
passed, it could be taken to the mint and coined into dollars which 
would have a debt-paying power of $1.29 an ounce. The owners 
of that silver would make over half a miUion of dollars by the opera- 
tion, but they would have done nothing whatever to entitle them to 
such a profit, and, on the contrary, people to whom debts were 
owing and who would be obliged to receive this silver in payment 
of debt, would lose a corresponding amount. The law would trans- 



5 

fer property from one man to another arbitrarily and without any 
justice. 

It is said that this law would favor debtors, and would enable 
them to pay their debts more easily. This would be true only of 
the debts existing at the time the law went into effect. These 
debts could be discharged for half their present value. Would that 
be honest ? If not honest, the question is settled. The sound 
judgment of the American people cannot be brought to favor dis- 
honesty. But would such payment be honest? Let us look at this 
question fairly. 

We have had the gold standard ever since 1834, except during 
the period of paper money caused by the war. We resumed gold 
payments in 1879. Since that date a current dollar has meant 25.8 
grains of standard gold. Every borrower has therefore received 
gold or its equivalent. With this gold he has purchased, at gold 
value, goods, machinery, buildings, land or whatever he required in 
his business, and from which he expected to derive a profit over 
and above the interest on his loan. When a loan has been made on 
good business principles, the borrower by the use of the money 
borrowed makes such a profit. Sometimes mistakes are made, but 
as a rule the borrower makes a profit besides paying his interest. 
When the time of payment comes he is therefore wealthier than 
when he first borrowed, better able to pay the loan, or better able 
to borrow again. Why should he not pay back the gold he bor- 
rowed, the use of which has increased his wealth ? There is no 
good reason. 

It is argued, however, that gold is rising in value, and in the in- 
terval between the borrowing and the time of payment this rise 
compels the borrower to pay back more value than he received. 
This is the argument on which silver advocates rely. Now if it 
were true that gold is thus appreciating, it is by no means clear 
that the borrower ought not to return just what he borrows. He 
makes the loan for his own profit, by the use of the loan he makes 



the interest he has agreed to pay, makes his profit, and is in condi- 
tion to pay back the principal. In this case it is simply a question 
of interest. The borrower will say, "at the time when I must repay 
this loan gold will be more valuable than it now is, I must be com- 
pensated for this increase in value; I can only afford to pay a low 
rate of interest." This is what actually happens, and whenever cur- 
rency IS appreciating then interest is low, and whenever currency is 
depreciating then interest is high. Some curious statistics have re- 
cently been collected by Professor Irving Fisher demonstrating 
these facts. It is therefore not clear that, even if gold is appreciat- 
ing, the borrower ought not to return exactly what he borrows, the 
fact of appreciation will be discounted in the low rate of interest. 

But the argument we are discussing assumes that there has been 
a very large increase in the value of gold within the last thirty years. 
To prove this they say that gold prices of commodities have fallen. 
It is assunied that a fall in prices means a rise in gold. But this is 
not necessarily true. New inventions and better machinery contin- 
ually cheapen the cost of production, and prices fall even if gold re- 
mains stationary. This is the universal law of prosperous industry; 
improved methods, lower cost, lower price to the consumer, in- 
creased comfort to mankind. It is more reasonable to attribute the 
fall in prices to greater cheapness of production than to the appre- 
ciation of gold, which is purely conjectural. For instance the rea- 
son for the fall in the price of wheat, which undoubtedly has been 
very great, is easily found in the severe competition of wheat pro- 
duced at low cost from Russia, from the Argentine Republic and 
from India. So in other cases where prices have fallen, we can find 
good cause for the fall in increasing supply and lessened cost. Fal- 
ling prices can be accounted for without the supposition of the 
appreciation of gold. 

But if v/e turn from commodities to labor, which produces com- 
modities, we find that wages have not declined. Wages paid in 
gold are higher than ever before in the world's history. This fact is 



7 

shown by the report made to Congress by the committee of which 
Senator Aldrich was chairman, and which is known as the Aldrich 
report. This report was made after the most painstaking and judi- 
cial examination and inquiry, and is of unquestioned authority. 
The wages of labor measured in gold have risen 69 per cent, since 
i860. They have risen 20 per cent, since we resumed gold pay- 
ments in 1879. The silver advocates who allege that gold has ap- 
preciated cannot explain this fact. It proves that gold has not 
appreciated. It is easier to procure by labor a dollar's worth of 
gold than ever before. The borrower of gold has then no justifica- 
tion in attempting to avoid the repayment of the metal borrowed. 
The attempt to substitute a cheaper metal will not bear honest 
scrutiny. 

I am, however, far from saying that all who are inclined to es- 
pouse the cause of silver are dishonest. They are simply mistaken. 
They have been deceived by fallacious statements. 

One very common idea is that free coinage will make money 
plenty, and somehow laboring men will be benefited. If this were 
so, I would be the last to oppose the change. I recognize the fact 
that when wages are high the country is prosperous, when they are 
low prosperity is declining. If, therefore, a system of currency can 
be devised by which wages can be raised and the condition of the 
laboring man improved, that system should be adopted. But I 
cannot see how the present proposal can produce any such result. 
It is a proposal to double the price of commodities. The laboring 
man wants low prices for commodities, not high prices. How will 
doubling the cost of living improve his condition? Manifestly 
there can be no improvement in this direction unless wages rise fas- 
ter than commodities. We all know that this is not so. All ex- 
perience teaches that wages rise more slowly than commodities; 
they are the last to feel the effects of advancing prices. Those of 
us who can remember the great advance in prices which took place 
with the issue of sfreenbacks in the war, must have observed this 



fact. Between i860 and 1865 prices of commodities went up 132 
per cent. Wages advanced only 49 per cent. A table from the 
Aldrich report, printed in this pamphlet, (copies of which are here 
for distribution) shows this in detail. Wherever, through all history, 
the currency has been inflated, prices of commodities have risen, 
and wages have risen much more slowly, if at all. This is seen in 
Mexico to-day, and, in fact, it is an argument which is gravely used, 
that the producers of all the commodities which are exported from 
Mexico have an advantage because labor is so low. They can 
pay for labor in silver, and by exporting their commodities can get 
paid for them in gold, which by exchange doubles the silver price 
at home Whatever truth there is in this argument comes from the 
fact that labor is forced down to a very low point by the use of 
silver currency in Mexico. 

We can see there the exact effect of silver free coinage. Silver 
has become the sole standard. Gold is banished, and is used only 
in foreign commerce. The laborer is paid in dollars which in com- 
mon trade pass at the rate of two Mexican dollars for one United 
States dollar. The Mexican dollar contains a little more silver 
than our silver dollar, but our dollar is maintained on a parity with 
the gold dollar by the United States government reserving to itself 
the right to coin silver dollars. Admit free coinage and the parity 
could no longer be maintained. Our coinage would sink to the 
level of Mexican coinage, and our labor would be paid in 50 cent 
dollars. 

The truth is that wages are paid out of the product of labor. 
When the laborer is intelligent, and is furnished with the best tools 
and best facilities of production, then the quantity of his product is 
larger, and his share in wages is correspondingly large. 

One other favorite argument of the advocates of silver is that the 
debtor class will be benefited. The creditor class is spoken of as 
oppressing the debtor class. This whole conception of debtor and 
creditor classes is misleadincj. The debtor borrows to secure his 



own good. He makes money out of his loan. Every one at times 
owes money and at times has money owing to him. Most people 
are both debtors and creditors at the same time. A clean cut sepa- 
ration of these classes is impossible. But if any class is entitled 
to the name of creditor class it is the laboring class. There is no 
wage earner who does not have owing to him always some sum for 
the labor which he has performed. He is not usually paid oftener 
than once a week, and frequently the term for which he is paid is 
longer than a week. It is safe to say that every Saturday night 
there it due to the laboring people of the United States at least one 
hundred million of dollars for the previous week's work. They are 
creditors to that amount. The laboring class is the most numerous 
and most important creditor class which exists. The debt due this 
class is never fully paid. Each succeeding week adds its hundred 
millions. Now this law proposes that these laboring men shall be 
paid with dollars coined out of silver now in possession of private 
individuals, which has cost the owners a trifle over 50 cents for each 
dollar. This single statement is sufficient to show the gross injus- 
tice of such a law. 

Free coinage has been described as a conspiracy against labor, 
and it is in effect such a conspiracy, for it would degrade laborers 
to the point of receiving one-half the value at present paid to them 
in wages. This conspiracy was entered into by the owners of silver 
mines about the year 1875, when silver, in consequence of enor- 
mous increase in production, began to decline in value. They 
thought if they could get the government to purchase it at the for- 
mer price their mines would be more valuable. Persistent and de- 
termined efforts have been made ever since to procure the passage 
of a free coinage law . There has been a paid silver lobby at Wash- 
ington, and misleading silver literature has been widely circulated. 
Paid orators have made specious pleas and given out misleading 
information until many honest people have been made to beHeve 
that there was some merit in free silver coinage at 16 to i. The 



lO 

times have been hard, and the promises of relief made by silver 
advocates have been very bold and attractive. A proposition to 
make something out of nothing is always attractive. A sick man is 
willing to try almost any remedy if the promise of certain relief is 
made strongly enough. We must not blame men harshly for this, 
but we must show them their mistake by the light of reason and ex- 
perience. 

Now it so happens that we have in our own history most valuable 
teaching on this very subject. In 1792 we began our coinage expe- 
rience, with the attempt to establish a double standard. For over 
eighty years the attempt was continued, changes were made in laws, 
but absolute failure was the result. That you may see the nature 
of this experiment and learn from it for yourselves the lessons 
which it teaches, 1 have condensed from the Mint reports and other 
sources a short history of United States coinage. As it contains 
tables and statistics I have had it printed that you may take it home 
and read it at your leisure. I will only summarize it now. 

Our coinage laws began with the law of 1792. This law was 
framed in accordance with the recommendations of Alexander 
Hamilton. It fixed the ratio of silver to gold at 15 to i. The 
standard dollar, or unit, was fixed at 24I grains of pure gold, and 
also at 37 1^ grains of pure silver. These two units were declared 
of equal value ; both were unlimited legal tender, and there was 
free coinage. Hamilton's system was the most perfect system for 
the estabUshment of the double standard which had ever been for- 
mulated, but the result did not justify the expectation. Gold was 
exported as fast as coined, because there was a profit realized by 
sending it to Europe. The commercial ratio did not remain the 
same as the legal ratio. 

Silver dollars were also sent over to the West Indies because of a 
small profit made by exchanging them for Spanish dollars. In 1806 
it was found that the United States silver dollars were sent out of 
the country as fast as coined. The mint was kept busy to no pur- 



1 1 

pose. In view of this fact Thomas Jefferson, then president, gave 
an order through his secretary of state, James Madison, to discon- 
tinue the coinage of silver dollars. The demonetization of silver 
dates back to that order made by the authority of Thomas Jefferson 
in 1806. The commercial conditions prevented the use of silver 
dollars. Jefferson recognized the fact, and stopped their coinage. 

The laws of 1834 and 1837 were then enacted, but they did not 
bring silver dollars into use. We practically had no silver dollars in 
circulation until 1878. 

Please take notice of these points in this history. The law of 
1792 enacted a double standard, but after forty-two years trial it 
failed in the attempt. It attempted to fix a ratio of 15 to i ; the 
commercial ratio became more than 15 to i, in spite of the law. 
Under that law of 1792 we had no gold; the acts of 1834 and 1837 
were passed to remedy this state of things ; they fixed the ratio at 
16 to I. The attempt was still made to continue the double stand- 
ard. These acts also failed. Nineteen years more of trial were 
added to the previous forty-two years. The act of 1853 then 
became necessary, because under the act of 1837 we had no silver, 
not even enough for small change. The act of 1853 practically 
abandoned the double standard. It made no provision for the 
coinage of silver dollars, but only for fractional parts of a dollar. 
It was a confession that the double standard had failed, and it was 
so stated in congress at the time by the chairman of the committee 
having charge of the act. 

This failure to establish the double standard was fully recognized 
after sixty years of trial. It failed when the difference between the 
legal ratio and the commercial ratio was comparatively small. Ac- 
cording to the best authorities, the commercial ratio was about 15I 
to I ; the legal ratio sought to be established was at first 15 to r, 
then 16 to I ; and yet the law could not overcome that small diff"er- 
ence. It could not move the commercial ratio down to 15 to i, 
nor up to 16 to I. What hope is there that a law can change the 



12 

commercial ratio now existing of over 30 to i, and make it 16 to i ? 

The law of 1873 only legalized the total disuse of the silver 
dollars which had previously existed for many years. To attach to 
this law of 1873 any importance in demonetizing silver, is to ignore 
the facts of history. The disuse of silver dollars had taken place 
long before, in consequence of natural laws which congress is pow- 
erless to overcome. 

The point to be observed is, that ivhen a profit can be made by 
sending coins out of the country^ they 7vill inevitably be sent out, and 
iviil not remain in circulation. 

If you keep this point in mind, you will see as you read this his- 
tory of our coinage, the folly of trying to fix by law values which 
differ from those fixed by the judgment of mankind in the markets 
of the world. 

The general conclusion from our experience is that the attempt 
to estabhsh a double standard has proved a complete failure. This 
agrees with the experience of other nations. France and the 
nations of the Latin union tried it and failed. Pevious to 1874 
there was in Europe an approximation to the circulation of both 
metals at the coining ratio of 15^ to r. Sometimes there was a 
small premium on gold, and sometimes a premium on silver. These 
premiums showed that the parity was not perfect. But with the 
great increase in silver production in 1874, the Latin union limited 
the coinage of silver. In 1878 it was stopped entirely. There is 
no free coinage in France or in any other European nation to-day. 
The value of the silver franc is kept at par with the gold franc, by 
the same means that the silver dollar is maintained at par with the 
gold dollar in this country. Under free coinage this parity could 
not be maintained a day. 

The gold franc is the real standard in France. In our country 
the gold dollar containing 25.8 grains of standard gold has been the 
standard of value ever since 1837. This standard has been entirely 
satisfactory. It has given us the least changeable measure of value 



13 

known to civilized man. It is the attempt to violently change this 
standard, which has deranged our monetary system, inspired dis- 
trust, destroyed credit, stopped industry, and is now opening the 
door of the laborer's cottage, that j^lenty may go out, and want may 
enter. 

Much of the obscurity which surrounds this subject will vanish if 
you reflect on the true function of gold in our currency. The 
modern methods of business recjuire very little gold to pass from 
hand to hand. Its most important function is to furnish the stan- 
dard with which to measure all other values. I am aware that this 
method of speaking of value as belongmg to an object is open to 
criticism. Value is not a quality, it grows out of the relation which 
one desirable object has to another. By comparison we determine 
which is the most valuable to us. So we can measure value by its 
relation to other objects which are desirable or valuable. Value is 
thus analagous to weight. Weight is not a quality of a stone. It 
is the relation which exists between the mass of the stone and the 
mass of the earth. The same stone on a different planet would 
have a different weight. But we measure this relation of weight by 
comparing one weight with another. So we compare one value 
with another. So long as business men are satisfied they are deal- 
ing with gold values, the gold itself may be locked up in bank 
vaults. But it must be known to be in the vaults in order to main- 
tain confidence. If gold thus performs its office, furnishes a stan- 
dard, and confidence exists, ninety-five per cent, of commercial 
transactions are performed by bank credits which offset each other. 
Gold is not used at all, or only for settlement of small balances. 
The modern use of bank checks, drafts, notes, bills of exchange 
and paper money, has furnished a means of doing business with 
much greater celerity and much less expense than was possible 
before these inventions. The telegraph and telephone are additional 
aids. But the uset\ilness of all these inventions is destroyed if the 
stability of the standard is threatened. For sixty years we have 



J 



H 

had the gold standard. About it has grown up this vast compli- 
cated system of credit. To violently and arbitrarily change this 
time-honored standard is to strike a blow at all business and invite 
universal disaster. 

There is one point which I wish to mention because it affords 
some excuse for the wild desire for change which pervades some of 
our Western and Southern states. It is true that our National bank 
system is not perfect. The defect which has been observed, is a 
certain want of elasticity in the volume of currency. When the 
grain crops are to be moved from the West, or the cotton crop 
from the South, a larger volume of currency is required than at 
other times. Our current circulation admits of httle variation. 
The West and South cry that their interests are neglected, and it is 
true that a banking system can be imagined which would answer 
the purpose better. The Canadian system is better than ours, and 
we ought not to be ashamed to learn of our neighbors. This 
defect can and ought to be remedied. 

But it is also said farm products are very low. This is particu- 
larly true of wheat. It is probable that we must grow less wheat 
for export. We cannot compete with India and the Argentine 
Republic. But we are not compelled to grow wheat. Farmers 
must diversify their products. Each locality must produce those 
products which will there pay the best, and there must be intelli- 
gence used in the choice of crops. But granting that the prices of 
farm products are low, how will coinage of silver at i6 to i benefit 
the farmer ? We are dependent now on the foreign market for the 
price of a large part of our agricultural produce. Under free coin- 
age the pressure to export would be greater than ever, because the 
price of commodities by rising faster than the wages of laborers 
would lessen the ability of consumers to consume, and a greater 
proportion of products would be forced to go abroad. The pressure 
to export would depress the foreign market, and at the same time 
the home market would be injured. This injury to the home mar- 



15 

ket would be most serious. The consumption which takes the pro- 
ducts of the farm without long transportation, is the most profitable. 
So that a general cut down in wages, which would follow the coin- 
age of silver at i6 to i, could not benefit the farmer. The small 
gain he would make in hiring his labor cheaper, would be lost many- 
times over in the injury to his market. If it were otherwise, few 
farmers would desire to better their own condition by forcing wages 
down. The farmer stands in very close relation to labor. The 
prosperous farmer labors himself. The old adge is true: 

"He, who by the land would thrive, 
Must hold the plow himself, or drive." 

Such a farmer is successful, and he recognizes the fact that his 
prosperity is bound up and interlaced with the prosperity of those 
who labor with him. 

One thing is certain, the market for the farmer which will pay 
him the best is the home market. The farmer will be most pros- 
perous when all other business is most piosperous. We see how 
interdependent are all parts of our society from what has recently 
happened, and what is now taking place. The stability of our stand- 
ard of value was threatened. Credit was disturbed. Capital became 
timid. Rates of interest advanced. The building trade, which now 
consumes immense quantities of iron began to languish. The pro- 
jectors of all great enterprises hesitated, and many suspended opera- 
tions. The consumption of iron decreased. Furnace fires were 
put out. Artisans and workmen were thrown out of work. Then 
the great iron mines found no market for their ore, and the 
miners became idle in the mountains of Michigan and Wiscon- 
sin. In Pennsylvania the coke ovens, which furnished the coke 
to smelt these ores, have recently put out their fires, and ten thou- 
sand coke burners are looking for work to supply food to their fam- 
ilies. All these workers have been deprived of their usual wages. 
They have no money to buy clothes, and the factories of New Eng- 
land pile up goods in their warehouses until they are forced to run 



i6 

short time, or to suspend work entirely. Tiie single blow at our 
standard of value, aimed by ignorance and conceit, has paralyzed 
industry all over our land, and has brought loss and depression to 
our own doors. The lesson is severe, but it is plain we are so bound 
together that whatever affects one part affects the whole. The 
West cannot say to the East, we are independent of you. The East 
cannot ignore the South, nor the South the North. We are one 
great country. Every partis dependent on every other part, and all 
must pull together for the common good. 

We have the best standard of value which exists. We have built 
upon it our great financial and commercial system. If any section 
of our country believes it can change this standard and destroy this 
system without injury to itself it makes a terrible mistake. The 
mere threat of a change of standard has deprived tens of thousands 
of workers of their wages. This standard of value, this gold stan- 
dard, has come down to us from our fathers. It is the outgrowth of 
experience. Nation after nation has adopted it, until all the great 
civilized nations are gold standard nations. They have done this 
because gold is better than silver for the purposes of standard 
money. To go back to silver would hinder the onward march of 
civilization. Our duty is to resist every such attempt at retrogres- 
sion. We must stand firmly for what is right, for what is just, and 
for what is honest. Then shall we all truly pull together for the 
common good. 



LIBRftRY OF CONGRESS 



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